Rory McIlroy Is Latest Superstar to Join Nike

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Nike (NYSE: NKE  ) is setting itself up as a big player in golf again by signing phenom Rory McIlroy to a monstrous sponsorship deal. Neither McIlroy or Nike will confirm the numbers, but reports have surfaced that McIlroy's deal is for up to 10 years and as much as $250 million, although ESPN is reporting a five-year agreement is more likely. No matter what the numbers are, this is a big move for McIlroy and Nike. 

Protecting the brand
This is a huge move by Nike and one that may be necessary to hold off competition from up-and-coming rivals. Oakley and Puma have become relevant in golf with the emergence of McIlroy and Rickie Fowler, respectively, and designs that have taken more risks than Nike's. Under Armour has also joined the discussion with Hunter Mahan as a sponsor and a slowly emerging golf business.

More established businesses are also fighting to stay relevent in a fast-changing golf game. Titleist is still one of the biggest players in the game and was recently sold along with FootJoy for $1.2 billion. Callaway is a big name, but operationally it's still in a world of hurt with operations that lose money year after year. But if Nike hadn't made this move it could have made a comeback. 

With a bigger balance sheet and far more revenue to fall back on, Nike could offer the best golfer in the world $20 million  to $25 million per year to be the heir apparent to Tiger Woods. As Tiger's career has tailed off in recent years, Nike had to devise an exit plan. McIlroy isn't a bad backup plan, even at a lofty price. 

The rich get richer
For a moment there, Nike seemed vulnerable in golf, but an eight-figure check can solve a lot of problems in business. Now it's time to get down to business and make sure that Tiger and McIlroy are playing with the best equipment in the game. McIlroy is making the switch from Titleist to Nike for all of his equipment, and a falloff in play would be disaster for the company's clubs. If Nike is going to make this deal pay off, it has to be the best in golf, not just pay the biggest names.  

Superstar stock picks
If you're interested in the best odds in the universe -- including more than a 70% chance at doubling the market's return over the long haul -- here's some very good news for you: Motley Fool Supernova is re-opening to new members for the first time ever today! Learn how you can get these kinds of market-beating odds by 
clicking here now.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2197306, ~/Articles/ArticleHandler.aspx, 9/30/2016 6:31:37 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:00 PM
NKE $52.65 Up +0.49 +0.94%
Nike CAPS Rating: *****